Economics of Beekeeping in Alberta 2011

Costs and returns for livestock, crops and several other enterprises have been monitored in the province in an extensive way since the 1960s. These studies have been viewed as an important tool for assisting producers in their cropping decisions and the federal and provincial governments in developing policies and programs for the different farm enterprises. Where information gaps existed in other provinces, results from these studies have served as the basis to fill those gaps.

The beekeeping sector is a vital component of the agricultural industry in Alberta. The major enterprises of the beekeeping industry in Alberta are honey production and pollination. A business analysis of beekeeping operations in 2011 across the province shows that a third enterprise – selling of bees (queens, over wintered nuclei (nucs), and hives) is emerging. Currently, there are 880 beekeepers and 282,000 bee colonies in Alberta. Approximately 85 percent of bee colonies are in commercial operations. Over 75,000 bee colonies are annually rented for pollinating pedigreed hybrid canola seed to ensure high yield of canola seed for farmers.

This report provides detailed information on the economics of beekeeping in the province, specifically for honey production and pollination during the 2011 production year. The 2011 costs and return study is a continuing effort to monitor honey/pollination enterprise production in the province which has been done periodically by the Economics Branch of Alberta Agriculture and Rural Development since the early 1970s. The last cost of production survey was completed in 2008. Information presented in this report can be used for several purposes including preparation of feasibility studies, program evaluation and policy development for the honey/pollination industry, etc. It would also assist individual study participants to compare their costs and returns with the group averages to better develop/manage their operations.

Objectives of the Study
Following are the objectives of this study:

To determine production costs and returns associated with beekeeping in Alberta.

To establish physical input/output relationships for beekeeping in Alberta.

To provide each study participant with a detailed analysis of his/her beekeeping operation and opportunity to compare the operation with the group averages.

To observe regional differences in costs and returns for beekeeping operations across the province.

To document how variation in size of operation affects net returns.

To provide an up-to-date economic report on the beekeeping in Alberta to assist governments in developing programs and policies for this industry.

The Study Sample
The sample for the 2011 study was randomly selected from the list of honey producers. The random selection of the sample ensured a representative cross section of producers in the province. A total of 76 producers were selected to be surveyed personally to obtain detailed cost and return information. About twenty one (21) beekeepers across the province completed the questionnaires for the 2011study. Fourteen (14) beekeepers produced only honey while the remaining seven (7) study participants rented their hives for pollination and extracted honey also.

Regional breakdown of the 21 beekeepers producing honey and renting out hives for pollination is as follows:

REGION

NUMBER OF PARTICIPANTS

AVERAGE NUMBER OF HIVES PER BEEKEEPER

Southern, Central and North East

9

2,890

North West

5

1,022

Peace River

7

1,412

TOTAL

21

1,952

The study sample of 21 beekeepers was further divided into the following two groups by size of operation.

BY SIZE OF BEEKEEPING OPERATION

NUMBER OF PARTICIPANTS

AVERAGE NUMBER OF HIVES PER BEEKEEPER

Up to 1,000 hives

10

527

Over 1,000 hives

11

3,248

TOTAL

21

1,952

Furthermore, the study sample was classified by beekeepers producing only honey and those renting out hives for pollination and extracting honey as well. Following is classification by region and by size of operation.

HONEY

POLLINATION

NUMBER OF PARTICIPANTS

AVERAGE NUMBER OF HIVES

NUMBER OF PARTICIPANTS

AVERAGE NUMBER OF HIVES

BY REGION

GROUP I - Southern, Central and North East

3

1,149

6

3,025

GROUP II - North West

5

1,022

-

-

GROUP III - Peace River

6

1,140

1

N/A

TOTAL

14

1,100

7

3,657

BY SIZE OF OPERATION

GROUP IV - Less than 1,000 hives

9

495

1

N/A

GROUP V - More than 1,000 hives

5

2,188

6

4,132

TOTAL

14

1,100

7

3,657

In total, the number of hives for both honey production and pollination in the study sample was approximately 41,000. This represents about 15 percent the total number of hives in the province in 2011. The survey data showed that the largest beekeeper operated operated approximately 9,000 hives and the smallest 136 hives. Although the sample size for the costs and return data was somewhat small, yet it provided enough information that the results could be used as guidelines.

Method of Analysis
The raw data obtained from the 21 beekeepers across the province was reviewed for information gaps before entering into the computer for analysis. Individual analyses, provincial and group averages (by region and size of operation) were developed using the Paradox program. Individual analyses were mailed to study participants for their review and feedback before finalizing the group averages for this report. The terminologies used in the report are defined as follows:

Total Value of Honey:
This refers to the value of honey produced over the course of the production year. Total value of honey is based on:

Bulk honey sales

Bulk honey inventory

Consumer pack sales

Consumer pack inventory, and

Other honey sales.

Total Value of Production:
In addition to total value of honey, total value of production includes:

Wax sales

Pollen sales

Crop insurance receipts

Miscellaneous income (any program payments)

Less honey purchase of resale, and

Hive rental - pollination.

The study participants were asked to provide actual sales and an estimate of expected price for any honey held in inventory and/or any other stock.

Variable Costs:
Most of the inputs used in honey production were purchased during the production year and recorded as such in the year-end statement. The study participants were asked to provide estimates for those costs for which actual records were not available, i.e., an inventory carried from last year. In 2011, the average hourly wage for hired labour was the actual wage reported by the study participant. Operating interest was the actual amount paid by the study participant. Operators and family labour under 16 years (unpaid labour) were valued at $10.50 and $7.50 per hour, respectively. The study participants were asked to provide estimates of hours spent on the honey operation by their family member(s) and themselves.

Capital Costs:
Capital costs include land rent/lease, building rent and forage access, bee equipment, and vehicles, etc. Capital interest was the actual amount paid by the study participants for capital purchases.

Cash Costs:
Cash costs represent all out-of-pocket costs incurred during the production period and marketing of honey. It does not include costs associated with operators and family labour and depreciation for buildings and equipment.

Total Production Costs:
Total production costs comprise of variable costs and capital costs.

Management Indicators:
Management indicators presented at the bottom of various tables show gross margin, return to unpaid labour, investment and equity. These indicators provide profit margins and economic viability of production at the provincial level by regions and by size of operations.